Hong Kong, China’s gross domestic product (GDP) growth
slowed to 1.9% year-on-year (y-o-y) in 4Q15 from 2.2% y-o-y in 3Q15. The slower
growth was due to declines in exports of services and gross domestic capital
formation, and slower growth in consumption. Singapore’s real GDP growth
remained unchanged from the previous quarter at 1.8% y-o-y in 4Q15. By sector,
economic growth was led by construction (4.9% y-o-y), wholesale and retail
trade (6.8% y-o-y), and information and communications (3.3% y-o-y), all of
which posted higher annual increases in 4Q15 than in 3Q15.

*Consumer price
inflation in Hong Kong, China rose to 2.7% y-o-y in January from 2.5% y-o-y in
December, driven by accelerating gains in food prices due to the difference in
the timing of the Lunar New Year in 2016 compared with 2015. In Malaysia,
inflation rose to 3.5% y-o-y in January from 2.7% y-o-y in December, led by a
more rapid annual increase in the utilities index. In Japan, consumer prices
remained unchanged in January from the same period a year earlier, following a
0.2% y-o-y increase in December. In Singapore, consumer prices fell 0.6% y-o-y
in January—after declining at the same rate in December—marking the 15th
consecutive month that deflation was recorded. In Viet Nam, consumer price
inflation rose to 1.3% y-o-y in February from 0.8% y-o-y in January.

*Hong Kong,
China’s exports fell 3.8% y-o-y in January to HKD300 billion. Imports also fell
9.0% y-o-y in January to HKD317 billion. As a result, Hong Kong, China reported
a trade deficit of HKD17.5 billion in January. The Philippines posted a US$603
million merchandise trade surplus in December, a reversal from the US$977
million trade deficit in November, as imports declined at a faster monthly pace
than exports.

*Manufacturing
output in Singapore fell 0.5% y-o-y in January—after declining 11.9% y-o-y in
December—as four out of the six manufacturing clusters recorded declines in
output.

*Last week,
Fitch Ratings (Fitch) affirmed its long-term foreign currency issuer default
rating of A– and long-term local currency issuer default rating of A for
Malaysia, with a stable outlook for both ratings.

*The Republic
of Korea’s external debt fell to US$396.6 billion at the end of 2015 from
US$424.4 billion a year earlier due to annual reductions in both short-term and
long-term external debt, according to the latest report on the country’s
international investment position released by the Bank of Korea last week.

*Easy Buy, a
Thai consumer finance company, raised THB4 billion from a dual-tranche bond
sale in Thailand last week, issuing THB2 billion worth of 3-year bonds at a
2.07% coupon and another THB2 billion of 5-year debentures at 2.56%. Khazanah
Nasional, Malaysia’s sovereign wealth fund, priced a 5-year US$750 million
sukuk via a special purpose vehicle, Danga Capital. The US$-denominated sukuk
was priced at a profit rate of 3.035% and structured under the Islamic finance
principle of wakalah (agency relationship).

*Government
bond yields fell last week for all tenors in Hong Kong, China and the
Philippines; and for most tenors in the PRC and Viet Nam. Yields rose for all
tenors in Malaysia; and for most tenors in Indonesia, Singapore, and Thailand;
while yield movements were mixed in the Rep. of Korea. Yield spreads between
the 2-year and 10-year tenors widened for all tenors except in the Rep. of
Korea and Malaysia.

Broad USD strength into NY close last Fri, as 4Q GDP,
core PCE, personal spending all surprised to the upside. NZD was down -2%, AUD
was down -1.5%. USDAXJs were broadly higher, in particular USDSGD and USDKRW.
Oil prices were slightly weaker but still managed to hold on to the week’s
gains. There was little surprises out from G20 over the weekend - PBoC Governor
Zhou assured that CNY has no basis for sustained depreciation; there is still
room for monetary support for China given low inflation; acknowledged for the
first time that China’s monetary policy is “prudent with slight easing bias”.
G20 members said that monetary policy alone cannot lead to balanced growth;
fiscal policy is key.

Focus for the week ahead is whether China walks the
talk (on fiscal policy, supply side reforms). China’s annual Chinese People’s
Political Consultative Conference (CPPCC) starts on 3 Mar (concludes on 13 Mar)
and National People Congress (NPC) starts on 5 Mar. China’s 5-year GDP target
for 2016-2020 is expected to be released. We expect (risk) markets to be
relatively stable during the meetings. Expect the China to tap on both demand
and supply side measures to reduce excess production, maintain aggregate
demand, reduce housing stocks, lower corporate and government debt as well as
to ease existing bottlenecks. In particular, there are talks of lowering
corporate tax and increasing fiscal deficit to 4% against the GDP.

Data calendar is busy this week with a handful of CPI
inflation data out from the region including Thailand, Indonesia (1 Mar); Korea
(2 Mar) and Philippines (3 Mar). PMIs release from around the world will start
coming on stream from 1 Mar. Other data we are also watching include Euro-area
Feb core and estimate CPI (Mon); NZ 4Q terms of trade, GDT auction; Japan 4Q
capex (Tue); Australia 4Q GDP; UK Feb construction PMI (Wed); US Feb payrolls
(Fri). Day ahead could see a continuation of USD strength against AXJs, in
particular SGD, KRW. GBP remains heavy amid Brexit concerns and USD strength.

USDJPY – Interim
Double-Bottom.The USDJPY ended three sessions
of uptick towards the 114-levels. Pair is slipping below the 114-levels to
around 113.80 following scrutiny of its monetary policy moves at the
G20-meeting over the weekend. Downside today could be limited as daily chart is
now showing bullish momentum, while stochastics is turning higher. On the
weekly charts though pair remains bearish bias. There is a potential
double-bottom after pair rebounded off 111-levels for the second time on 24 Feb
(first was on 11 Feb), creating a potential interim base around those levels. A
rebound could revisit 115-levels (38.2% Fibo retracement of the Jan-Feb
downswing, 21DMA). Break above could challenge its 50% fib of 116.30 levels.
Week ahead has BOJ governor Kuroda appearing in parliament (Mon); Jan jobless
rate; 4Q15 capex spending; Feb PMI mfg (Tue); Feb monetary base (Wed); Jan
labor cash earning (Fri). Data out this morning was mixed with industrial
production falling by a preliminary 3.8% y/y in Jan from Dec’s 1.9%, though on
a m/m basis it rebounded 3.7% from -1.7% in Dec. Retail sales fell 1.1% m/m in
Jan, accelerating from Dec’s -0.2%.

NZDUSD – Further Upside on the Break of 0.6760. NZD upside failed to gather momentum as broad USD strength saw NZD
plunged from high of 0.6770s to 0.6570 levels this morning. We said last Fri
that a clean break (on weekly close basis) above 0.6760 is needed to see a
sustained move higher. This did not materialise.
Daily momentum and stochastics have now turned bearish bias. Support at 0.6550
(38.2% fibo retracement of Dec high to Jan low), 0.6470 (23.6% fibo).
Resistance at 0.6620 (50% fibo). We remain better sellers on rally. Maintain
bearish outlook due to a combination of factors including RBNZ explicit bias
for further easing and weaker NZD (as export prices remain soft), benign
inflation outlook, challenging dairy market dynamics, high risk of current
account deficit widening, further downside risk to growth outlook. Week
remaining brings Jan building permits (Mon); 4Q ToT; GDT auction (Tue); Feb
house prices (Wed); government finances (Fri).

USDCAD – Sell
on Rally. The pair broke below the
1.36-figure and was last seen around the 1.35-figure. The breakout to the
downside seems to be gaining steam and next bearish target is seen at 1.3270
ahead of the Oct low of 1.2830. With oil establishing a base around the
USD30-figure and CAD having displayed tendency to be sticky to the downside
even with crude volatility, we see upside risks to the oil prices translating
to upside risks to CAD.

Asia ex Japan Currencies

The SGD NEER trades 0.93% below the
implied mid-point of 1.3965. The top end is estimated at 1.3683 and the
floor at 1.4247.

USDSGD – Beyond 1.41 Eyed.USDSGD is testing the
100DMA (1.4115), though it is currently hovering a tad off that level at
1.4110. Daily charts and stochastics suggest bullish momentum. Upside could
visit 1.4150 (50% Fibo retracement of the Jan-Feb downswing); 1.4220 (61.8%
Fibo). Downside could revisit 1.4050 (21DMA); 1.4000 (23.6% Fibo). Quiet week
ahead with just Feb PMI on Wed and Feb Nikkei PMI on Thu.

SGDMYR – Rising
Wedge in the Making? SGDMYR was a touch softer overnight, as ringgit was
broadly resilient while SGD underperformed. Price
action appears to suggest a rising wedge in the making. This is typically a
bearish reversal. Cross was last seen around 2.9970 levels. Daily momentum
remains mild bullish bias. Stochastics is at overbought conditions. We continue
to watch further price action. Resistance at 3.0090 (61.8% fibo
retracement of Jan high to Jan low), 3.03 (50 DMA). Key support remains at
2.9550 (200 DMA). A break below this is needed for further downside move to
materialise. Next support level at 2.8940 (previous low).

USDCNH –Pressure Still To The Upside. Chinese
officials including PBOC chief, Finance Minister and Premier Li managed to
convince the G20 meeting over the country’s policies and growth trajectories.
Focus will now be on reform measures especially with the NPC/CPPCC meeting this
week. Offshore yuan slipped lower underpinned by a firmer dollar with USDCNH
hovering around 6.5520. Gap between the CNH and CNY has diminished. USD/CNY
was fixed 114 pips higher at 6.5452 (vs. previous 6.5338). CNY/MYR was fixed 31
pips higher at 0.6434 (vs. previous 0.6404). The RMB index based on the
basket of currencies was last at 99.29 as of 26 Feb, according to CFETS.
China’s annual Chinese People’s Political Consultative Conference (CPPCC)
starts on 3 Mar (concludes on 13 Mar) and National People Congress (NPC) starts
on 5 Mar. China’s 5-year GDP target for 2016-2020 is expected to be released.
We expect (risk) markets to be relatively stable during the meetings.
Expect the China to tap on both demand and supply side measures to reduce
excess production, maintain aggregate demand, reduce housing stocks, lower
corporate and government debt as well as to ease existing bottlenecks. In
particular, there are talks of lowering corporate tax and increasing fiscal
deficit to 4% against the GDP.

SGDCNY –
Upside Bias. This cross has broken above its trading range of
4.6260-4.6700. Downside momentum is waning and this cross seems to be regaining
an upside bias. Support is still at the 50-DMA around 4.6185. Further upside to
meet barrier at 4.7000 and then at 4.7500.

1s USDINR NDF – Uptrend Intact Ahead of
Budget. Pair inched higher as the Budget
approached today, touching a high of 69.43 before tapering off to below the
69.30 levels currently. Upside pressure is fanned by month-end oil importers’
demand. The slight bullish momentum is still mild, though stochastics is at
overbought levels. A revisit of 69.43 (25 Feb high) cannot be ruled out before
the next barrier at 70.05. Uptrend in tact but we still hold our view that
there is still bearish divergence in this pair and spot prices on the
daily, weekly and monthly chart. Correction could thus be
sharp and may have
to wait until after the Union Budget today. Support is seen at 68.60 (21DMA) before 67.90 (50DMA). All eyes are on
the budget later today with the focus on whether the government chooses to
boost growth or continue its fiscal consolidation efforts. Foreign investors
sold USD154.94mn of equities and USD152.35mn of debt on 25 Feb.

USDIDR – Rangy. USDIDR slipped lower the last
week but has since regained some ground on the back of a firmer dollar tone and
on month-end dollar demand. Pair was last seen around 13400. Pair has lost most
of its bearish momentum. IDR continues to be supported by improving
macroeconomic fundamentals, political stability, and the Jokowi government’s
push for infrastructure building and investment amid low oil prices and
supportive monetary policy. Support is seen around the year’s low 13295, while
resistance is around 13500 (22 Feb’s high). The JISDOR was fixed lower at 13400
on Fri from 13416 on Thu. Sentiments were negative last week with
foreign funds selling a net USD22.25mn of equities. They had also removed a net
IDR0.68tn from their outstanding holdings of government debt on 22-24 Feb
(latest data available).

USDPHP
– Upside Bias Within Range.
USDPHP has been hovering within familiar ranges of
47.500-47.860. Pair is currently on the uptick, playing catch-up with its
regional peers. Last seen around 47.597, pair has lost most of its bearish
momentum, and stochastics is bullish bias. With risks still to the upside, a
move towards 9 Feb high of 47.860 is possible. Any slippages should find
support around
47.200 (100DMA). Investor sentiments soured last week with foreign funds
selling a net USD24.29mn in equities.

USDTHB – Testing 100DMA. USDTHB was range-bound for most of the week, capped by the 100DMA
around 35.840. Pair has since tested the 100DMA but is now hovering around
35.745. Daily momentum remains bullish bias, though stochastics is now
tentatively turning lower. Weekly charts remain bearish bias. A clean break of the 100DMA-levels would expose the next barrier
around 35.960 (61.8% Fibo retracement of the Jan-Feb downswing). Further slippages should find support around 35.675 (38.2% Fibo). Investment sentiments was mixed last week with foreign funds buying a net THB1.05bn in equities but
selling a net THB3.08bn in government debt yesterday. Week
ahead brings Jan trade; Jan current account; Jan mfg production index (Mon);
Feb CPI (Tue); 26 Feb foreign reserves (Fri).

Rates

Malaysia

§MGS mostly ended unchanged as buyers lined up at last done levels. On
the other hand, MGIIs saw buying with the curve ending 1-4bps lower and most
trades centered upon the newly issued 5.5y MGII 8/21.

§Local IRS market continued to see receiving interest, with long end
rates down about 3bps. The 5y IRS dealt at 3.78% and 3.77%. 3M KLIBOR remained
the same at 3.74%.

§In PDS, quasis focused on the long end and AAAs on the belly. Cagamas
11/20 was given 0.5bp tighter from last done at 4.175% (MGS+68bps/z+39bps).
Dana 22s traded 2bps wider at 4.25% (MGS+56bps/z+33bps), which is around AAA
levels. The AA space was rather active on YTL, Ranhill and UEM. The belly
widened 1-3bps, while the short end tightened 1bp as they were better bid. AEON
Co (M) Bhd is planning a MYR1b IMTN programme rated AA2 by RAM.

Singapore

§The selling in long end SGS continued at market open with yields up by
7bps at one point. But bottom fishers came out and yields retraced back to close
+1-2bps. SGS look cheap, but sentiment remains erratic. SGD IRS curve lowered
3bps at the front end.

§Asian credits 3-5bps better across the board, with some tech names
outperforming such as TENCNT 24 better by 8bps. China CDS saw some reprieve
from the paying and managed to accede to a little profit taking, perhaps taking
cue from the drop in CNH forwards as risk sentiment and outlook on China
improved. Sovereigns had very small amounts being traded, generally on the
offer side.

Indonesia

§Indonesia’s government bonds prices were slightly firmer during the back
of positive global sentiments on the last Friday. It brought the yield rates to
drop by around 1-3 bps across the curve. However, the upside movement on
Indonesia’s government bonds prices was capped by some selling activities from
some major market players. It has been seen by reducing their inventories on
the last few days, ahead of the next auction. Market players are now focusing
to the real demand that will be seen on the next auction.

FY15 earnings were below expectations and our FY16/17
earnings have been lowered by about 8% respectively on account of
higher credit cost assumptions. Positively though, its recent Career
Transition Scheme (CTS) should provide savings of up to MYR200m per
annum to support earnings growth in FY16. We maintain our TP of MYR5.85
pegged to a 2016 PBV of 0.9x, with a projected ROE of 8.9% for FY16.
HOLD.

While AMMB’s 9MFY16 results were within expectations, this
was on the back of ongoing net credit recoveries which may not be
sustainable. Amid ongoing NIM compression and cautious expansion,
earnings growth is likely to be muted and we project ROEs of just over
8%. We see little catalyst and downgrade the stock to SELL, with a
lower TP of MYR4.10 (FY17 P/BV of 0.8x) vs MYR4.90 previously (CY16
P/BV of 0.9x).

BArmada turning around, with much focus on cost and
growth. FY15 core earnings were ahead of our forecasts on higher
T&I works in 4Q. FY16 will be a pedestrian year, which is to be
expected. The excitement lies in FY17, as the commencement of 4 new FPSO/FSU
charters will see a 2.4x jump in earnings momentum. We raise FY16/17
net profit forecasts by 61%/8% and lift our SOP-based TP to MYR1.45
(+21%) to incorporate its Malta FSU operations and cost savings from
effective costs/cashflow management.

We are Neutral on FGV’s latest plan to acquire a
55%-equity stake in Zhong Ling Nutril-Oil Holdings Ltd (ZL) for
MYR0.98b cash. On paper, valuation appears decent at 9-12x 2013-15 PERs
and 3x 2013 audited NAV. However, we believe China’s consumer market is
full of challenges despite its potential. Maintain SELL and TP of
MYR1.30 on 16x 2016 PER.

While we continue to like BIMB for its strong fundamentals
and high capitalization, we have taken a more cautious stance on Bank
Islam’s personal financing portfolio, which currently accounts for 30%
of total financing. We maintain our HOLD call but with a marginally
higher SOP-based TP of MYR3.90 (+10sen).

There were plenty of costs spikes, indicative of kitchen
sinking exercise to ensure a ‘cleaner’ 2016 is at hand. This resulted
in 4Q15 and 2015 core net profits of MYR17m and MYR279m falling short
vs our MYR480m for 2015. We tweak our 2016-17 earnings forecasts by
-3.7% and -3.0% respectively on management’s latest inputs and we
introduce 2018 forecast. Maintain BUY with a slightly higher TP of
MYR1.80 (from MYR1.75), pegged to an unchanged 1x 2016 P/BV.

The 4Q15 earnings outperformance was due to
better-than-expected sales and margins contribution from Singapore.
However, dividend was in line as a final DPS of 67sen brings FY15 DPS
to 72sen (DPR: 96%). Into FY16, we expect weaker domestic ops on
generally weaker consumer sentiment to be buffered by the Singapore
ops. Maintain HOLD, with a raised DCF-TP to MYR13.00 (from MYR12.20) on
rolling forward valuation.

FY15 results exceeded our expectation by 25% largely on
significant turnaround at its downstream division in 4Q15. For 2016, we
forecast 40% EPS growth on higher output (+10%) and CPO ASP (+6%). We
continue to like SOP for its long term growth prospects, sweetened by
its property development potential arising from its strategic landbank
in Miri. Reiterate BUY on a higher TP of MYR5.28 (+5sen).

2015 earnings and dividends were above expectations due to
lower-than-expected taxes and cost at the print segment, and a slight
revenue outperformance. We are unsure if the cost savings in 4Q15 are
sustainable. We conservatively maintain our forward earnings and
dividends estimates pending an analyst briefing on 4 Mar 2016. Maintain
HOLD and SOP-based TP of MYR2.40 for now.

3QFY3/16 results were within expectations. Less newsprint
consumption and labour costs at the Malaysian segment greatly moderated
weak adex sentiment in Greater China and Canada. We keep our earnings
estimates, BUY call and MYR0.73 TP. Valuations remains very cheap at
<10x PER and <5x EV/EBITDA. Note that there is further upside to
its already attractive dividend yields of >6% p.a. as our DPS
estimates assume only 50% DPR.

Following a strong 4Q15, management expects another busy
quarter backed by a solid order backlog. 3-month average book-to-bill
ratio also improved to 1.4x (12-month high). Solid orders at both the
MVS and ABI divisions came from a sizeable number of clients globally.
We see upside to our forecasts should order momentum sustains into
2Q16. For now, our forecasts and MYR3.80 TP (13.5x CY17 EPS) are
unchanged. Exciting times are ahead with stronger earnings visibility;
reiterate BUY.

Management is actively looking out for M&As in the
near term. A net cash position of MYR137m (as of Dec 2015) provides
such opportunity. On operations, FMCG continues to do the heavy lifting
while F&B could still be a slight drag in the near term. Maintain
HOLD but with a trimmed TP of MYR1.40 (-5sen) on unchanged 12.5x FY17
PER.

4Q15 results were in line as rental income was mainly
supported by KOMTAR JBCC and 27 QSR Properties. KOMTAR JBCC would
remain as ALSREIT’s main earnings growth catalyst. Maintain BUY with an
unchanged DCF-based TP of MYR1.07 (WACC: 7.2%, terminal yield: 7%).

Global: G-20 wants governments doing more and Central
Banks less. Finance chiefs from the world’s top economies committed their
governments to doing more to boost global growth amid mounting concerns
over the potency of monetary policy. In a pledge that will prove easier
to write than deliver and may disappoint investors looking for a
coordinated stimulus plan, the Group of 20 said "we will use fiscal
policy flexibly to strengthen growth, job creation and confidence."
After a two- day meeting in Shanghai, finance ministers and central bank
governors also doubled down on a line from their last gathering that
"monetary policy alone cannot lead to balanced growth."
(Source: Bloomberg)

South Korea: March manufacturers’ confidence unchanged at
66, according to Bank of Korea statement. Proportion of companies
surveyed complaining about weak domestic demand fell to 24% from 25.2% in
last survey. Confidence index for non-manufacturers for March fell to 67
from 68. Results were based on survey conducted February 15-22, with
responses from 1,748 manufacturers and 1,121 non-manufacturers. (Source:
Bloomberg)

Other News:

Bioalpha: Health awareness to give Bioalpha a boost.
Increasing costs of healthcare, paired with growing consciousness among
consumers of preventive healthcare, are turning people towards supplement
products which will benefit Bioalpha Holdings. The company is currently
in talks with several MNCs for ODM contracts and a product that is
accepted by two or three MNCs will easily translate into additional
revenue of MYR4m and MYR5m. Bioalpha also has plans to expand its
pharmacy network through M&A exercises and open new retail outlets
primarily located in the Klang Valley and Johor in a bid to double sales
of its in-house products. (Source: The Edge Financial Daily).

Scomi Engineering: Gains from Brazil turmoil. Its partner
for the Line 17 monorail project in Sao Paulo had pulled out from the
project according to a Brazilian financial newspaper and Scomi is
reported to assume the remaining works which is estimated to be worth
USD300m according to CEO Kanesan Veluppilai. It currently has an
orderbook of MYR1.32b excluding the additional Line 17 orders. (Source:
The Star)

JHM Consolidation: To invest MYR25m in expansion. The
company will be investing MYR25m in an expansion project later this year
to support an automotive lighting deal that will generate USD50m per
annum starting next year. JHM would supply signature lighting lamps for
the rear end of branded cards of a North American customer. (Source: The
Star)